Obama revives tax plan in bid for fiscal 'bargain'

CHATTANOOGA: US President Barack Obama Tuesday offered to lower corporate tax rates in exchange for simplifying a code "riddled with loopholes," in a renewed bid to strike a fiscal deal with rival Republicans.

The reheated tax reform plan, first proposed by Obama and rejected by Republicans in 2011, is part of an attempt by the president to create a "better bargain" for the middle class in a second term thus far marked by few accomplishments.

Republicans, especially Tea Party conservatives, have rejected any proposals that would increase government revenue, insisting that only spending cuts can roll back the bloated deficit without further harming the sluggish economic recovery.

Seeking middle ground, Obama, in a speech in Chattanooga, Tennessee, proposed lowering the maximum rate to 28 percent, down from 35 percent.

"Our tax code is so riddled with loopholes and special interest tax breaks that a lot of companies who are doing the right thing and investing in America pay 35 percent in their taxes," Obama said.

In contrast, "corporations who have got fancy accountants and stash their money overseas, they pay little or nothing in taxes. That's not fair, and it's not good for the economy here," he lamented.

"So I'm willing to simplify our tax code," he said, offering a plan that "closes those loopholes, ends incentives to ship jobs overseas, (and) lowers the rate for businesses that are creating jobs right here in America."

The speech at an Amazon distribution center in Chattanooga aimed to continue a ground campaign launched last week to revive interest in stalled economic initiatives, many of which date back to his first term.

Obama is seeking a "grand bargain" with rival Republicans that would simplify the tax code while boosting investment in education and infrastructure.

"I want to use some of the money that we save by closing these loopholes to create more good construction jobs with infrastructure initiatives that I already talked about," Obama said.

"Here's the bottom line: I'm willing to work with Republicans on reforming our corporate tax code, as long as we use the money from transitioning to a simpler tax system for a significant investment in creating middle-class jobs," the president said, to applause.

But with 2014 congressional elections on the horizon, the Republican-controlled House of Representatives has expressed little interest in working with the president.